The Luzzatto Co. has acquired Austin Oaks, a 12-building, 445,322-square-foot office park in Austin, Texas, from Spire Realty Group LP.

HFF facilitated the deal on behalf of the seller and also arranged a 10-year acquisition loan for the buyer through a life company lender. The price of the transaction was not disclosed.

“Austin Oaks represents a unique opportunity to reposition an outdated business park with good bones and nice green space into a creative office campus with a diverse tenant base,” Asher Luzzatto, the Luzzatto Co.’s president, told Commercial Property Executive. “We invest in deals that yield not only financial success, but tenant success, well-being and health. We spend so much of our lives in our workplaces and so we deserve workplaces that stimulate creativity and promote health.”

With hundreds of Oak trees, a rolling natural environment, good glass exposure and relatively high ceilings, Austin Oaks seemed a great fit already, and Luzzatto added the company was going to make it an even better fit, citing some “very cool ideas about how to transform this campus.”

“Also, I look around and see ‘smart’ money chasing glass buildings in concrete environments, needing market or above-market rents to justify the prices being paid, and I noticed that a major segment of employers and employees, large and small, are not being served by those deals in Austin,” he said. “We might be nearing a peak in many respects, but Austin Oaks will be a steady ship even in choppy waters.”

Future growth

Austin Oaks is situated on 31.4 acres along MoPac, making it Austin’s largest infill office park. Its tenant roster includes 140 companies from a diverse mix of industries, including financial services, health care, legal and technology.

Luzzatto noted that the company plans to reposition the asset into a more creative, tech-friendly campus.

Built originally in parts of the ’70s and ’80s, the office park’s redevelopment will be handled by Michael Hsu Office of Architecture, and will include the addition of green initiatives and aesthetic elements. The Luzzatto Co. will also add fitness amenities and a café to the campus.

According to HFF’s executive investment summary, the property is 82 percent leased, with rents averaging 27 percent below market and two years of average term remaining.

Additionally, the office park offers the opportunity to redevelop the site over time to 1.3 million square feet of office, multifamily and retail space, due to recent entitlements granted for the site.

The Austin Boom

According to Luzzatto, political and socioeconomic changes are transferring some power away from coastal cities and arguably the biggest beneficiary of such changes is Texas.

“Of all the cities in Texas, we believe Austin has the most interesting growth opportunity,” he said. “Specifically, where Austin Oaks sits in northwest Austin, a boom is happening, but not in a way that has removed the character from the place. The same cannot be said about downtown and other areas of Austin, which will inevitably begin to look much like other major U.S. cities when the condo and Class A office buildings are built.

Last September, Luzzatto Co. began construction on Expo Station, an 80,000-square-foot creative office space in West L.A. The transit-oriented project will feature two levels of parking, three stories of creative office space and more than 16,000 square feet of outdoor patio areas.